Services-Medical Laboratories
Laboratory Corporation of America Holdings operates as a life sciences company that provides vital information to help doctors, hospitals, pharmaceutical companies, researchers, and patients make clear and confident decisions. It operates in two segments, Labcorp Diagnostics and Labcorp Drug Development. The company offers various tests, such as blood chemistry analyses, urinalyses, blood cell counts, thyroid tests, PAP tests, hemoglobin A1C and vitamin D, prostate-specific antigens, tests for sexually transmitted diseases, hepatitis C tests, microbiology cultures and procedures, and alcohol and other substance-abuse tests. It also provides specialty testing services comprising gene-based and esoteric testing; advanced tests target specific diseases, including anatomic pathology/oncology, cardiovascular disease, coagulation, diagnostic genetics, endocrinology, infectious disease, women's health, pharmacogenetics, and parentage and donor testing; occupational testing services, medical drug monitoring services, chronic disease programs, and kidney stone prevention tests; and health and wellness services to employers and managed care organizations (MCOs), including health fairs, on-site and at-home testing, vaccinations, and health screenings. In addition, the company offers online and mobile applications to enable patients to check test results; and online applications for MCOs and accountable care organizations; and end-to-end drug development, medical device, and companion diagnostic development solutions from early-stage research to clinical development and commercial market access. It serves MCOs, pharmaceutical, biotechnology, medical device and diagnostics companies, governmental agencies, physicians and other healthcare providers, hospitals and health systems, employers, patients and consumers, contract research organizations, and independent clinical laboratories. The company was incorporated in 1994 and is headquartered in Burlington, North Carolina.
Discounted Cash Flow Valuation of Laboratory Corp Of America Holdings
Growth
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Discount
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Multiple
g\r | +10% | +11% | +12% | +13% | +14% |
---|---|---|---|---|---|
0% | 10 | 9 | 8 | 8 | 7 |
+1% | 11 | 10 | 9 | 8 | 8 |
+2% | 13 | 11 | 10 | 9 | 8 |
+3% | 14 | 13 | 11 | 10 | 9 |
+4% | 17 | 14 | 12 | 11 | 10 |
Years | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | TV |
---|---|---|---|---|---|---|---|---|---|---|---|---|
FCF | $683.2M | $743.1M | $805.2M | $869.1M | $934.4M | $1.001B | $1.067B | $1.134B | $1.2B | $1.266B | $1.329B | $13.29B |
DCF | $646.2M | $608.8M | $571.4M | $534.2M | $497.5M | $461.5M | $426.4M | $392.4M | $359.7M | $328.5M | $3.285B | |
Value | $8.111B |
In the chart Earnings are multiplied by this value.
High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.
Years | 12-2015 | 12-2016 | 12-2017 | 12-2018 | 12-2019 | 12-2020 | 12-2021 | 12-2022 | 12-2023 | TTM |
---|---|---|---|---|---|---|---|---|---|---|
Net Margin | 5% | 7.6% | 12% | 7.8% | 7.1% | 11% | 15% | 8.6% | 3.4% | 3.7% |
ROA | 7.1% | 9.2% | 8.2% | 8.2% | 7.4% | 12% | 16% | 8.8% | 4.3% | 4.3% |
ROE | 8.8% | 13% | 19% | 13% | 11% | 17% | 23% | 13% | 5.3% | 5.4% |
The average Net Margin over the past 5 years is +8.81%.
The trend of Net Margin over the past 5 years is -0.39%.
The average ROA over the past 5 years is +9.48%.
The trend of ROA over the past 5 years is -0.32%.
The average ROE over the past 5 years is +13.55%.
The trend of ROE over the past 5 years is -0.71%.
Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.
Years | 12-2015 | 12-2016 | 12-2017 | 12-2018 | 12-2019 | 12-2020 | 12-2021 | 12-2022 | 12-2023 | TTM |
---|---|---|---|---|---|---|---|---|---|---|
Debt FCF | 9.49 | 7.19 | 6.31 | 6.61 | 6.34 | 3.31 | 2.05 | 3.62 | 5.78 | 4.46 |
Debt Equity | 1.39 | 1.17 | 1.06 | 0.88 | 0.87 | 0.62 | 0.53 | 0.53 | 0.64 | 0.38 |
MIN | ||||||||||
Graham Stability | - | - | 100% | 100% | 86% | 100% | 100% | 81% | 24% | 24% |
The Debt/FCF trailing twelve month is 4.46.
The trend of Debt/FCF over the past 5 years is -0.39.
Graham’s Stability measure stands at 0.24.
Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.
Years | 12-2016 | 12-2018 | 12-2020 | 12-2022 | Trend |
---|---|---|---|---|---|
Revenue | 3.4% | 1.4% | -4.5% | -18% | -4.7% |
Net Income | -7.7% | -14% | -35% | -67% | -7.9% |
Stockholders Equity | 5.2% | 2.5% | -5.6% | -22% | -7.3% |
FCF | -0.37% | -1.1% | -21% | -41% | -6.3% |
The Revenue CAGR over the past 5 years is +1.42%.
The trend of Revenue growth rate over the past 5 years is -4.67%.
The Earnings CAGR over the past 5 years is -13.91%.
The trend of Earnings growth rate over the past 5 years is -7.9%.
The Equity CAGR over the past 5 years is +2.47%.
The trend of Equity growth rate over the past 5 years is -7.26%.
The FCF CAGR over the past 5 years is -1.14%.
The trend of FCF growth rate over the past 5 years is -6.26%.